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News

Europe's largest LNG terminal opens in UK

Published: Wednesday 13 May 2009

Europe's largest terminal for receiving giant tankers of liquefied natural gas officially opened on 12 May in Wales, against a backdrop of ample supplies and weak demand.

Background:

Liquefied natural gas (LNG) is one of the world's fastest growing sources of energy. Global LNG demand is expected to reach approximately 470 million tons per annum (MTA) by 2030, an increase of over 200 percent since 2005.

The South Hook terminal at Milford Haven, Pembrokeshire in Wales represents a technological milestone and will make additional supplies of cleaner-burning natural gas available to the UK and the rest of Europe.

South Hook LNG Terminal Company Ltd. is owned by Qatar Petroleum (67.5%), ExxonMobil (24.15%) and Total (8.35%). It is part of the larger 'Qatargas 2' joint venture, which supplies gas to the UK from the North Field off the coast of Qatar, and is brought ashore to be processed and liquefied at Ras Laffan Industrial City in Qatar. It is then loaded onto a fleet of world-class Q-Max and Q-Flex LNG ships and transported to the UK.

The terminal adds to the UK's LNG import capacity and energy diversity, and will have the ability to deliver up to two billion cubic feet of gas daily into the natural gas grid when it reaches full operational capacity, at the end of 2009. The terminal, which is being completed in two phases, includes five LNG storage tanks, a regasification plant, ship unloading systems and a jetty to allow the berthing of the world's largest LNG vessels.

As Robert S. Franklin, vice-president of production at ExxonMobil recently said in Brusssels (EurActiv 27/03/09), the company plans to open one more major LNG terminal, 16km offshore in Northern Italy. When it reaches its full capacity of 80bn cubic metres per year, it will provide 10% of Italy's total gas needs, Franklin said.

Other related news:

The terminal - a joint venture between US major Exxon Mobil, state-run Qatar Petroleum and French energy group Total - can pump gas into the national grid at a rate of about 11 billion cubic metres (bcm) a year.

It will be able to supply 21 bcm a year of gas once the second phase of the project is complete and the last of its five storage tanks enter service by the end of 2009, its project manager said.

"The commissioning of the plant is done," Daniel Wieczynski told journalists at the inauguration on Tuesday of the terminal in south Wales, which was was attended by the Emir of Qatar and Britain's Queen Elizabeth II.

Two of the storage tanks, each the size of London's Albert Hall concert venue, are already operational. The third is expected to come into service in June, the fourth in October and the fifth before the end of the year, Wieczynski added.

Liquefied Natural Gas (LNG) was embraced as a fuel for the future because in contrast to pipeline gas, it can be shipped anywhere in the world.

But the infrastructure required is very expensive and demand has fallen significantly because of global economic slowdown.

The chief executive of Qatargas predicted consumption of the fuel should begin to recover from early next year.

"Yes, demand has gone down and we see more production coming, this will put pressure on prices. But we planned those projects on lower prices than we see in the market now," Faisal Mohammed Al-Suwaidi told reporters.

Britain's annual gas demand stands at about 100 billion cubic metres, according to figures provided by British gas and electricity supplier Centrica.

Following the decline of the nation's oil and gas production in the North Sea, about half of its needs are expected to come from imports this year. By 2017, LNG is expected to account for nearly 30 percent of Britain's total supply.

(EurActiv with Reuters.)

Positions:

Rex W. Tillerson, chairman and chief executive officer of the Exxon Mobil Corporation, said:

"In the years ahead, the world will continue to face many energy challenges as we meet the growing energy needs of the global economy in a safe, efficient, and environmentally responsible way. South Hook, as a vital part of the Qatargas 2 project, stands as a shining example of how this can be achieved. Working together with Qatar Petroleum in open markets and under stable policies, South Hook is a striking example that international teamwork and technology can provide the energy needed to fuel economic growth, improve environmental performance, and build a brighter future for all."

"The inauguration of the terminal is a significant milestone in the Qatargas 2 project," said Abdulla bin Hamad Al-Attiyah, Qatar's deputy premier and minister of energy and industry. "ExxonMobil has been a strong partner with Qatar Petroleum, offering innovative technologies and expertise that have helped transform our regional gas resource into a global supply of clean-burning energy," he told the opening event.

Al-Attiyah added that strong demand from China, the world's second biggest energy consumer after the US, would compensate for lower LNG demand elsewhere.